Correlation Between Baidu and MOGU

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Can any of the company-specific risk be diversified away by investing in both Baidu and MOGU at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Baidu and MOGU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and MOGU Inc, you can compare the effects of market volatilities on Baidu and MOGU and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Baidu with a short position of MOGU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and MOGU.

Diversification Opportunities for Baidu and MOGU

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Baidu and MOGU is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and MOGU Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOGU Inc and Baidu is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Baidu Inc are associated (or correlated) with MOGU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOGU Inc has no effect on the direction of Baidu i.e., Baidu and MOGU go up and down completely randomly.

Pair Corralation between Baidu and MOGU

Given the investment horizon of 90 days Baidu is expected to generate 3.22 times less return on investment than MOGU. But when comparing it to its historical volatility, Baidu Inc is 1.9 times less risky than MOGU. It trades about 0.11 of its potential returns per unit of risk. MOGU Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  213.00  in MOGU Inc on September 22, 2024 and sell it today you would earn a total of  36.00  from holding MOGU Inc or generate 16.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Baidu Inc  vs.  MOGU Inc

 Performance 
       Timeline  
Baidu Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Baidu Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Baidu is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
MOGU Inc 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in MOGU Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, MOGU unveiled solid returns over the last few months and may actually be approaching a breakup point.

Baidu and MOGU Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Baidu and MOGU

The main advantage of trading using opposite Baidu and MOGU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, MOGU can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MOGU will offset losses from the drop in MOGU's long position.
The idea behind Baidu Inc and MOGU Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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